In its report “Macro comment — Eastern promises: Mena update”, the bank pointed out that 2013 proved to be an encouraging year for a number of countries in the Mena region. “The hydrocarbon-based GCC economies displayed rates of GDP increases high enough to define these countries as a pocket of above average growth. On the other hand, some improvements were spotted in countries where the activity had been deeply disturbed by the Arab Spring-like uprising,” said Dr Wetterwald.

He said after the growth revival ignited by the oil price increase of 2010-11, it was public spending that added momentum to the GCC economy. Such government support is continget on firm oil prices if one does not want to endanger the fiscal and/or external equilibriums, Dr Wetterwald pointed out.

Credit Agricole observed that the growth dynamic experienced by Kuwait, Saudi Arabia and the UAE is still vivid as shown by the January Purchasing Managers Indices. In Saudi Arabia, the headline PMI rose to 59.7 (from 58.7 in December), and in the UAE the index remained comfortably above the 50 no-change mark despite its slightly weaker reading.

Qatar National Bank, or QNB, predicted that the GCC economic growth would rise to 4.7 per cent in 2014 from 3.7 per cent in 2013 on the back of the non-oil sector benefiting from large infrastructure projects. “The GCC would continue to be the engine of the Middle East and North Africa region by providing external financing in the form of official grants, soft loans and large foreign direct investment, or FDI.”

“This is critical for a smooth economic recovery in the Mena region. Looking ahead, Mena countries will continue on their path of economic transition owing primarily to the benign GCC outlook which will continue to act as the locomotive for regional growth. That said, caution must be given to the external environment in oil importing countries which remains volatile, with spillover from the Syria conflict,” QNB said in a report.

In a recent forecast, National Bank of Kuwait said in the resource-rich GCC region growth prospects remained favourable, supported by high oil prices, a steady flow of government development spending and — in some cases — an increasingly buoyant private sector. “Real GCC non-oil GDP growth is forecast at around 5.5 per cent per year in 2014 and 2015, 0.5 percentage points higher than in 2013. Qatar will remain the best performer, but the UAE economy — boosted by returning confidence and renewed impetus from infrastructure investment — appears to be improving the quickest.”

According to the International Monetary Fund, Bahrain, Iran, Algeria and Iraq will not arrive at fiscal surpluses if the oil price remains at the current level, while Kuwait, Saudi Arabia and the UAE are on the safe side.

The IMF forecast GCC economic growth to be 4.4 per cent in 2014 as oil production rises and the non-oil sector benefits from the large infrastructure projects being implemented. However, because of the volatility inherent in oil prices, the IMF expects downside pressures during 2014, as well as longer-term structural challenges.

The IMF had noted that most GCC countries have accumulated large official external assets and would be able to comfortably weather temporary declines in oil income. Total public external assets in the GCC are estimated at nearly $2 trillion, which could be used to make up for any shortfall in oil revenue.

Since 2009, combined GDP of the GCC, or the total value of goods and services provided, has grown by over 68 per cent during the past four years, from $955 billion in 2009 to an estimated $1.6 trillion in 2013. Current account balance, which has been enviably positive for a long time, has grown even faster during those four years, from $108 to $361 billion in 2013, an overall increase of 235 per cent, according to IMF figures.